Description of the Opportunity

In March 2016, Skeena Resources Limited signed an agreement with Barrick Gold, granting Skeena an option to acquire a 100% interest in the past-producing, high-grade Snip gold mine in northwest British Columbia.

The property consists of one mining lease and four mineral tenures totaling approximately 1,932 hectares in the Liard Mining Division. The Snip mine produced approximately one million ounces of gold from 1991 until 1999 at an average gold grade of 27.5 g/t.The opportunity is to re-examine historic drill intercepts on the Snip property that may indicate mineralization that would be economic with the recent construction of nearby infrastructure and at today’s higher gold prices. Skeena is excited to renew exploration for additional mineralized shoots in a large shear structure which already demonstrated the presence of a million ounce high-grade deposit. With our knowledge of the area and historic connection to the site we are confident we have the team to generate and pursue viable new targets.

Proposed Work Plan

Under the direction of personnel with previous experience on the property, Skeena plans to complete a thorough review of the exploration, development, and production history to estimate resources already indicated by past results and identify exploration targets for further drilling. The Company will assess the target grade and size threshold required to support renewed production, and determine what resource has been already identified and what needs to be found. Diamond drilling on trend and to depth will then be required to develop the opportunity, with the additional upside goal of identifying other high-grade mineralized shoots within the structural corridor.

History of the Property

The Snip vein mineralization, discovered in 1964 by Cominco geologist Ted Muraro, lay dormant until drilled in 1986 as part of a Cominco joint venture with Netolitzky-led Delaware Resources. Those drill results triggered a massive claim staking rush and exploration boom throughout the Golden Triangle that led to the discovery and development of Barrick Gold’s Eskay Creek (past production of 3.27 million ounces of gold at a grade of 49 g/t and 158 million ounces of silver at 2,406 g/t). Other significant projects in the Golden Triangle include Pretium’s Brucejack and Valley of the Kings gold deposits, Imperial Metal’s Red Chris porphyry copper-gold mine, Teck and Novagold’s Galore Creek deposit, Teck’s Shaft Creek porphyry copper-gold deposit, Seabridge’s porphyry copper-gold Deep Kerr Project, and Ascot’s re-activated Premier Project.

Twin Zone.jpgThe Snip deposit is an auriferous southwest-dipping shear vein system, hosted within Upper Triassic Stuhini Group feldspathic meta-sediments that are intruded by Early Jurassic age stocks and plutons. Other major deposits within the Golden Triangle are also related to compositionally similar Early Jurassic intrusions.The Snip deposit occurs within the southeast trending Bronson structural corridor which also controls the other significant deposits within the Iskut River area. Approximately 60% of the production was obtained from the Twin Zone, a 0.5 to 15 metre wide sheared quartz-carbonate-sulphide vein system that cuts through a massively bedded feldspathic greywacke-siltstone sequence. Other sub parallel structures located in the footwall to the Twin Zone accounted for the rest of the production. A barren, post mineralization dike divides the main vein into two parts for most of its length, hence the name Twin Zone. Gold mineralization occurs in one centimetre to one metre wide alternating bands of massive calcite, disseminated to massive pyrite, biotite-calcite as thin bands or streaks, or in quartz with sulphides in a crackle breccia or pyritic to non-pyritic fault gouge. Total sulphide content seldom exceeds two percent and the mineralized structures characteristically contain minor pyrrhotite, arsenopyrite, sphalerite, chalcopyrite and rare galena.

The Twin Zone occupies an east-southeast striking structure with dips ranging from 30 to 90 degrees to the southwest. The zone has been traced by drilling and mining over a strike length of approximately 1,000 metres and over a dip length of 500 metres. The deposit remains partially open along strike, and in some production areas, where the estimated cut-off grade of 23 g/t Au was below the economic limit for mining at the time.

Snip was historically burdened with the high cost of being a stand-aloneoperation serviced by air via the Bronson airstrip, and by hovercraft from Wrangell, Alaska by way of the Iskut River. This required high grades to ensure economic viability. Additionally, mechanized mining shrunk from approximately 82% of mine production during the first production year (1991), to approximately 16% by 1998, which resulted in a near-doubling of the unit mining cost over the mine life at the same time the gold price fell from a high of US$383 per ounce in 1994 to US$300 per ounce by 1999.

The Golden Triangle district has become one of the most important metal regions in Western Canada and is being further enhanced with recent significantly improved infrastructure, including paving of the Stewart-Cassiar highway north from Smithers, ocean port facilities for export of concentrate at Stewart, and completion of BC Hydro’s 287 kilovolt Northwest Transmission Line from Terrace to Bob Quinn Lake and north to the Red Chris mine. The hydroelectric facility at McLymont Creek, built 2 years ago, is located approximately 20 kilometres east of Snip. Road access to the McLymont Creek facility is currently within 20 kilometres of the Snip mine along predominantly flat terrain in the Iskut River valley bottom.

The prospects for redeveloping the Snip property have improved dramatically, given today’s substantially higher gold prices, subsequent improvements in infrastructure and access, the prospect of remaining high-grade mineralization and exploration upside. Skeena’s Chairman Ron Netolitzky’s past history and intimate knowledge of the property will greatly enhance our odds for success.

Deal Terms

Under the terms of the option agreement, Skeena may acquire a 100% interest in the Snip Property in consideration for:

  • The issuance of 3,250,000 common shares of the Company
  • Work commitment by Skeena of $500,000 within the first 12 months of the agreementAn additional work commitment of $1,500,000 within the first 30 months of the agreement
  • Resource report delivered by Skeena to Barrick prior to final exercise of the option
  • 1% NSR royalty interest retained by Barrick in the Snip property
  • Subject to exercise of the option and to Skeena delineating in excess of 2 million ounces of gold in the resource report, Barrick retains a back-in right to earn up to 51% of the property in return for three times Skeena’s cumulative expenditures, and thereafter formation of a joint venture

The technical information on this page has been reviewed and approved by Rupert Allan, P.Geol., Skeena’s Vice-President of Exploration and a Qualified Person as defined by Canada’s National Instrument 43-101.